Finding Text
Finding 2022-001: Payroll
Information on the Federal Program: 93.471
Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR) Part 200,
paragraph 430 “Compensation – personal services” requires that charges to Federal awards for
salaries and wages must be based on records that accurately reflect the work performed, and that
these records must be supported by a system of internal control which provides reasonable assurance
that the charges are accurate, allowable, and properly allocated. Additionally, these records must
comply with established accounting policies and practices of the non-Federal entity.
Condition: Subsequent to the completion of the 2021 audit, the Organization modified its timesheet
process for employees that work on the Federal pass-through grant. The new methodology was in
effect for the last two months of 2022. The time allocated is now based on actual time, and we were
able to tie the amount calculated based on hours reported to the invoice submitted to the pass-through
entity for the month. However, there was no direct audit trail to the amount in the general ledger (the
GL allocation was posted for the quarter in total). In addition, if employees work over the time allowed
by the budget the amount is manually adjusted down before allocation. Also, the supervisory approval
of the timesheets is over a month report that lists only the names of the employees (does not show the
hours reported).
Cause: An allocation methodology based on actual timesheets was implemented at the end of 2022,
but we identified certain recommended improvements.
Effect or Potential Effect: The Organization could inadvertently mischarge salaries and wages to its
various programs.
Questioned Costs: Undetermined. Context: This is deemed to be systemic in nature.
Identification as a Repeat Finding, if Applicable: See prior year 2021-001
Recommendation: We recommend that the Organization revisit the procedures in the current year to
ensure that the time allocation can be easily verified (i.e. record the allocations on a monthly basis at a
minimum, and maintain a schedule to reconcile amount per pay period to total entered in the general
ledger). The Organization should be careful to document that if time allocated to the Federal project is
manually reduced that is does not result in overcharging a different program. The approval of the
timesheets should be on a report that shows the actual time that is being reviewed/approved.